Understanding Risk-Adjusted Returns When Trading Options

| March 3, 2022

Trading OptionsMy articles this week on calculating a Twilio (TWLO) profit and Capital One Financial (COF) loss continue generating questions on how profit and loss calculations are applied to overall returns? So, I’ll dive a bit deeper into the topic.

It’s a well-known investment maxim that risk is correlated to reward.  But, when it comes to options trading, it seems people are often making claims to consistently hitting singles while simultaneously being home run kings.

I’d like to take this opportunity to explore how returns should be calculated, whether it’s possible to achieve a high percentage win rate along with high percentage returns.  And finally, which options trading strategies offer the best probability of consistent profitability.

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Category: Options Trading

About the Author ()

Adrian Collins works as an Outreach Manager at Option Dash. Option Dash is always looking forward to offering the best covered call and cash secured put screener on the internet. Adrian is passionate about spreading knowledge on stock and options trading for the rising investors.